The Potential Adoption of IFRS for U.S. Issuers: A Textual Analysis of Responses to the Proposal

Nicholas Pawsey

Alistair Brown

Chatterjee Bikram

Abstract

This paper uses textual analysis to analyse the comments received by the U.S. SEC on the proposal to allow U.S. listed companies to preparefinancial statements following International Financial ReportingStandards (IFRS). The paper contributes to the understanding of theoverall desirability of international accounting convergence as wellas the politics involved in attempting to reach consensus on suchdecisions. Most respondents supported the proposal. Respondentsoutlined the advantages of adopting IFRS as enhanced comparability,simplification, cost savings, extensive information sets, its capacityto improve the standard setting process, and its potential to serveU.S. interests. On the other hand, a minority of respondents werenot supportive of the proposal. There was criticism of the lack ofindependence, enforcement mechanisms and resource availabilityof the IASB; the deleterious effect on U.S. interests; the questionablequality of the IFRS; and the perceived myths of convergence.Following the review of such comments, the paper outlines theimplications of such a potential adoption of IFRS in U.S. to theAsian region as the pressure to extend IFRS to non-listed companiesmounts. The paper also argues that Asian countries need to lobby forhigher representation on the IASB and consider local customs, lawand context while adopting IFRS, as such factors have been stressedupon by U.S. respondents to the SEC’s proposal.